How to make your retirement savings last
Retirement planning doesn’t end the day your co-workers wish you goodbye.

In fact, how you manage your money during retirement is incredibly important to your financial security.
Many investors who feel they saved enough for retirement end up facing financial hardship during their golden years because they don’t know how to spend the money correctly.
Edmond Walters, founder and CEO of eMoney Advisor, says that retirees must stay vigilant to protect their assets during retirement.
In fact, when preparing for retirement, Walters says people shouldn’t assume their cost of living will go up by the inflation rate alone.
While the rule of thumb is to save 10% of your gross income each year for retirement, Walters says that retirees should not take out more than 5% during any one year.
Have your financial planner create an optimization analysis for you, adds Walters.
This will help you figure out where you should take your retirement money from first so that you can minimize your taxes and make your savings last.
And don’t just rely on your financial planner or adviser for help.
“Most people have multiple advisers and they don’t even know it,” says Walters.
“Instead of having five individual meetings a year with your attorney, your accountant, your insurance adviser and financial planners, have just two or three meetings where they all attend.”
If an adviser balks at meeting with the others who work for you, that should be a red flag.

NEW YORK (MarketWatch) — Retirement planning doesn’t end the day your co-workers wish you goodbye. In fact, how you manage your money during retirement is incredibly important to your financial security. Many investors who feel they saved enough for retirement end up facing financial hardship during their golden years because they don’t know how to spend the money correctly. …

You’ve heard scary retirement stories before — tales of woe and angst from would-be retirees who fell short of the goal line.
You’ve heard all about how not to plan for your golden years: how to spend more than you save, how to ineffectively draw up your retirement goals.
But how can you retire well instead?

Four simple steps will help get you there.

Step 1: Invest along the way.

Planning financially for retirement is a simple yet daunting task, and the plethora of investment vehicles and potential holdings only make it more so.
But you don’t have to be scared by all of these options.

In fact, if you don’t have time to follow individual companies on a regular basis, you’re better off taking the easy way out and sidling up to some funds instead.

We at the Fool are big proponents of index funds and funds with low expense ratios.

They just make sense: The less money you pay to fund managers, the more money you can keep in your investments — and the greater rewards you can reap as a result.

Furthermore, the funds you hold can effectively reflect your personal investing style as well as your stage in life.

If you’d like to play it a little closer to the vest, a fund like the Vanguard Large-Cap Index (VLACX) may be more your style.

With an expense ratio of 0.20% and known entities such as ExxonMobil (NYSE: XOM), General Electric (NYSE: GE), Citigroup (NYSE: C), and Procter & Gamble (NYSE: PG), you’ll typically endure less volatility while keeping a grasp on winning companies.

Step 2: Maintain a list of your retirement goals.

But your investments won’t do you any good if you have no plan for how you’re going to use them.

What do you want to do in retirement?

Do you want to move to Maui?

Spend your days volunteering at an animal shelter?

Buy an Airstream and travel the world?

Once you have a list of your goals and dreams — no matter how big, small, or silly they may seem — you can plan your finances accordingly.

Are you willing to forgo other luxuries when you plunk thousands of dollars down on that RV?

Exactly how much would your mortgage be in Maui?

Questions like these will help guide your financial plans today.
And if your dreams and goals change through the years, no matter.Keep your list of retirement aims current, and you’ll always have your eye on the prize.

Step 3: Keep some cash in short-term accounts.

While you’re investing and dreaming, be sure to plunk some money where you can get to it easily. Even though you’ve got your mind on retirement, life continues to happen, and with it come surprises that you’ve got to be ready for.
By socking some cash away in short-term vehicles such as money market accounts, certificates of deposit, and plain ol’ run-of-the-mill savings accounts, you’ll be ready for the unexpected even if the market is taking one of its customary naps.

Step 4: Sit back and enjoy the ride.
Once you lay the groundwork for your retirement goals and plans, keep an eye on them — even index funds and other, more hands-off holdings need attention from time to time. If you find you’re going in an unfavorable direction, either with
your investment decisions or your long-term goals, take care to change
them. It’s your future, after all; no sense in sitting idly by and watching your plans go down the wrong road.

Granted, retirement planning takes time and effort. But the rewards will be worth the investment.

Here’s a good article to read about where to retire. Here’s a summary:
Many of you tell us that from reading our columns, you sense we love Vero Beach, Fla., where we moved in 2001.
So, you ask, would we recommend the area to other people looking for a place to retire?
We do love Vero Beach for its natural beauty, friendly people and small-town charm, as well as for its cultural and educational amenities and high-quality health-care facilities.
But we can’t recommend any particular place to retire because that’s a decision only you can make based on your preferences and needs.
Your first decision, in fact, is whether to move at all.
In the introduction to the fifth edition of his popular “Retirement Places Rated” book, author David Savageau points out that the community where you already live can give you a deep sense of belonging you may not find somewhere else.
And a new study by the senior-advocacy group AARP refutes the myth that Americans move when they retire.
“Among the most reassuring findings is that for the most part, people 60-plus like their communities,” the study found.
“Contrary to myth, nine out of 10 older persons remain in the area in which they reside when making the transition to their retirement years.”
The study, based on an analysis of U.S. census data and interviews by the research firm GfK NOP/ Roper Public Affairs with more than 1,200 people in 40 communities, explored the reasons why older people choose to stay in the area they live or look for a new place.
A warmer climate, a lower crime rate and lower property and state property taxes are common characteristics of places — many in the South and West — that attract older Americans.
Weather is the No. 1 reason older people cited for leaving their old communities.
But there is much more to it.
“Interpersonal factors” are a major consideration, too.
Among people 60 and over who moved to new areas, nearly one in five cited being closer to family and friends as their prime motivation.
In addition, among those who moved, “the opportunity to meet and make friends with people over 60” was the attribute most closely correlated with being satisfied with their new communities.
This sense of “community satisfaction,” or being happy with the place where you live, is a complex phenomenon driven by many dissimilar factors.
We find this concept worth exploring because it can help us decide whether to stay or move when we retire.
In addition to the opportunity to meet people and make friends, factors such as low pollution, an affordable cost of living, high-quality government services, opportunities for adult education, having a variety of housing options for older residents, and a lack of urban sprawl were closely associated with community satisfaction for those who moved.
But among those who have stayed put, other factors such low taxes, low crime, employment opportunities and availability of houses of worship turned up as significant.
The only three common factors between the two groups were low pollution, high-quality government services and low urban sprawl.
As to dislikes, taxes, government officials/politics and weather were cited most often by those who stayed in their communities.
Ultimately, staying or moving — and, if moving, where to move — is a personal choice based on how important different factors are for us.

Retirees live cheaply in Panama
When it comes to age-related discounts, you can’t beat Panama.
To attract more investment, the Central American nation has eased immigration laws and set up a discount bonanza for expatriate pensioners that includes 20 percent off professional services such as those provided by lawyers, architects and physical therapists; no property tax for 20 years; no income tax on income earned outside Panama; and a 50 percent discount on real estate closing costs.
The list of discounts goes on and on, including price breaks on telephone service, surgery and domestic airfares and a one-time waiver of duties on imported household goods up to $10,000.
All it takes to qualify is pension income of $500 or more per month — at any age and from any source.
Although the law creating the discounts has been around since 1987, Panama began to promote the discounts only about two years ago, said Rafael Donado, commercial attache at the Panamanian Embassy.
“It’s booming at this point — and the most attractive program worldwide,” he said.
And Panama’s legal tender is the dollar, making relocation even more painless, he said.
Well, we can’t all move to Panama, although it does sound tempting.
But many of us can qualify for other age-related discounts, both stateside and abroad, that help pre-retirement and retirement income go further.
From being able to get in the short line for car inspections in the District of Columbia to cheaper rates for vacationing in a castle in Spain, they’re worth checking out.
One of the most obvious places to start is with AARP, which provides a package of discounts for members.
Although many age-related discounts are reserved for people in their 60s, AARP membership begins at 50, and the $12.50 annual membership fee buys discounts of up to 30 percent on car rental rates from Hertz and Avis and on eye exams and eyewear from companies including LensCrafters and Pearle Vision and many other goods and services.
This holiday season, the group is launching a Web site that pools discounts on more than 500 brand-name products.
Airlines used to be a good deal for older travelers, offering a 10 percent discount, but most of them have cut those programs — along with peanuts, jobs and other expenses.
Southwest Airlines still offers savings for travelers older than 65, however.
airlines, such as SAS, Lufthansa and Virgin, still offer discounts, said Joan Rattner Heilman, author of Unbelievably Good Deals and Great Adventures That You Absolutely Can’t Get Unless You’re Over 50 (McGraw Hill).
“As far as everything else goes, there are more and more discounts out there” for lodging, meals and rental cars, she said.
But don’t assume the discount is the best deal.
Check travel Web sites, including Cheapfares.com and Travelocity.com, that offer bargains, and you might find an even bigger break.
There are particularly nice bargains for lodging outside the United States, although you have to book them well in advance, said Heilman.
For instance, if at least one member of your party is 60, you can get 40 percent off a stay (except for Friday and Saturday nights) at the beautiful Pousada de Castelo, perched on a hilltop surrounded by centuries-old walls in Obidos, Spain.
And Spain has breaks on its government-owned inns, many of which are converted castles or convents.
There are also many good deals on outdoor activities.
The National Park Service has offered its Golden Age Passport for 41 years.
A one-time fee of $10 buys a lifetime of free admission to national parks, including Shenandoah National Park, which charges $15 per car from March through November, and Yellowstone National Park, which charges $25 per car.
Heilman said many retirees ski more these days because they can ski midweek when the slopes are less crowded.
Many ski resorts cut lift-ticket prices in half for skiers older than 60 or 65, she said, and some allow even older skiers to ski for free.
For instance, a six-day trip on the Salmon River in Idaho offered by Warren River Expeditions costs $190 less if you’re 50 or older.
You might have to produce your driver’s license to get lower-priced movie tickets, but who knows, said Heilman.

Small changes can help you save a lot of money for retirement
You don’t have to deprive yourself to cut your spending.
Just by making small changes, you may save a lot of money.
For example, you could stop buying lottery tickets or ask yourself, before you buy something, how many hours you had to work to pay for it or start to shop at less expensive places — going from Nordstrom’s to Macy’s to Kohl’s to Marshalls to a consignment shop.
That was some of the advice given during a forum Monday in Parsippany on steps people can take to bolster their health and their wealth.
The forum was sponsored by the Daily Record and Rutgers Cooperative Extension of Morris County.
The speakers were Barbara O’Neill and Patricia Q. Brennan of Rutgers Cooperative Extension.
O’Neill is co-author of a new book, “Small Steps to Health and Wealth,” on which the forum was based.
-Try to discard “baggage” that you may have learned as a child, Brennan said.
Such as: You’re not supposed to talk about money.
The government and your employer will take care of you.
To show your love, you must always give an expensive gift.
A high amount of debt is normal.
The man should handle all the finances.
If you can cut your food bill, which typically is $189.20 a week, by 10 percent, you can save $1,000 a year.
· To increase your income, consider getting a part-time job during the holidays.
Make affirmations, such as “I have stopped smoking” or “I am a millionaire in the making.”
For example, if your debt exceeds 20 percent of your take-home pay, it’s a danger sign — unless it’s mortgage debt.
O’Neill said, “If your debt is that high, you’re working one day a week for nothing.”
· When you get a raise in salary, save some of it.

To obtain a copy of the book, send a check for
$20 to Morris County Extension Service, FCHS Department, Rutgers
Cooperative Extension of Morris County, P.O. Box 900, Morristown, NJ
07963-0900. If you pick up the book at the extension office, the cost
is $16.

Five tips to help Americans kick your retirement planning into overdrive:

1) Save, Save and then Save Some More!

You’ll never save enough for retirement if you don’t start saving now.
Put every penny you can into your company’s defined contribution plan,
(commonly referred to as a 401(k), 403(b), 457 plan, etc.) especially
if your contributions are being matched by your employer. You want to
shelter all the money you can from taxes and take full advantage of
your employer’s matching retirement plan contributions. Also, don’t be
afraid to look at after-tax planning vehicles like the Roth IRA or the
new Roth 401(k), which is now a permanent part of the tax code as a
result of the Pension Protection Act. We are not likely to see tax
rates as low as they are now, so it may make sense to grow assets that
you won’t have to pay taxes on later.

“While it may be hard to give up the current year’s tax deduction, you
should ask yourself which makes more sense: paying tax on the seed
(your original contributions) or the crop (your earnings). In most
cases it makes more sense to pay taxes on the seed. That’s why we like
the new Roth 401(k)s,” says Hinds.

Hinds says that having a good reason to withdraw money doesn’t matter.
While you may think it wise to pay off debt or buy a bigger house,
remember that you will likely have to “pay yourself back with interest”
for any loans you take against your company-sponsored retirement plan.
If you have a self-directed IRA, you will incur taxes and penalties if
you withdraw the money too soon. Worse than that, says Hinds, the money
will not be growing – either tax-free or tax-deferred, depending on the
type of IRA you’ve got. Early withdrawals for the wrong reasons put you
further away from your goal of achieving a secure retirement.

3) Social “not much” Security

If you were counting on Social Security benefits to help supplement
your retirement savings, think again. Most experts agree that the
social security benefit program that our parents and grandparents knew
will not be the one we experience. According to many studies, within
the next decade, Social Security will begin to pay out more in benefits
than it will collect in taxes. Hinds warns that the Social Security
check that arrives in the mail each month will not likely be a
meaningful contributor to retirement income, and says the need for
people to develop their own effective retirement planning strategies
has never been more important.

4) Diversity Matters

A diverse portfolio can be your ticket to stability. By creating a
diversified portfolio – and not just among stock sectors – your
investments may perform more stably. An investment portfolio should
include stocks, bonds and money market securities. According to Hinds,
having technology stocks, airline stocks and automobile stocks does not
constitute diversification.

“Investors should look to strike a balance, to create a diversified
portfolio that will help them reach their retirement goals effectively
and safely. And, while the core part of your portfolio should include a
strategic mix of stocks, bonds and cash, a portion should be devoted to
more progressive strategies aimed at producing greater potential
growth. Some of the newer strategies even have built in income
protection in retirement, while still having the growth potential of
the stock market,” she says.

Diversification seeks to improve the performance by spreading your
investment dollars into various asset classes to add balance to your
portfolio. However, using this methodology does not guarantee a profit
or protection from loss in a declining market.

5) Retirement Planning is a Rolling Stone

If you switch employers, consider rolling your retirement plan into a
self-directed IRA account — not your next employer’s 401(k) account. A
self-directed IRA opens additional investment options not available in
a 401(k) account and provides the opportunity to create a Stretch IRA,
a great distribution and legacy planning strategy. Although it is
tempting to take the cash and treat yourself to something nice, the
responsible thing is to preserve your retirement funds.

“Leave that money alone. You want it to grow so that you can enjoy a
secure retirement later,” says Hinds. “The average American gets a new
job every four years. If a retirement plan is cashed out every time a
person gets a new job, that person will never be able to retire and
live a similar lifestyle from his or her savings. That doesn’t even
take into account the tax penalties associated with cashing out a
retirement account.”

More than 52 percent of Americans currently say they are worried about outliving their retirement money.
In contrast to the average retirement age decreasing from 66.9 in 1990 to 62.7 in 2000 – an average of five months per year – the average life expectancy has increased an average of four months per year over that same period.
This is a compounding effect that has caused a stressful situation for many retirees.
The “old view” of retirement planning included Social Security, corporate pensions, other personal savings, company savings, and no debt.
So, liability management has become almost a necessity to survive for a growing number of retirees.
When turning 62, an increasingly popular financial strategy for homeowners becomes available.
A reverse mortgage is a loan against a house that allows the owner to stay there without selling and requires no monthly mortgage payment for as long as the owner lives in the house.
The loan qualification is largely based on the age of the occupants (one occupant must be at least 62) and the current value of the house.
There are no minimum income, asset or credit qualifications to meet, and it has no effect on Social Security or Medicare benefits.
Reverse mortgages also have no stated maturity date and are due only after the last owner no longer lives in the home.
The three most appealing things to seniors are that the Federal Housing Administration and Fannie Mae guarantee the payments to the borrower, guarantee borrowers can stay in their home, and guarantee the loan payoff can never exceed the home’s value, thus protecting the owners and their heirs from getting into financial trouble.
Like other financial strategies in retirement, making decisions based on opinions and not facts can lead to poor decisions.
The most common myths of reverse mortgages are that the lender takes ownership of the home, the loan becomes the heir’s responsibility, and the heirs will be opposed to the strategy.
The borrower retains ownership of the home just like the home was originally financed.
The reverse mortgage is a non-recourse loan, meaning the lender can only derive repayment of the loan from the proceeds of the sale of the property.
Experience demonstrates that once educated, most heirs are strongly in favor of the reverse mortgage strategy.
So if your retirement plan needs additional income, you want to reduce the burden on your children, or you just want to give your grandkids an early inheritance, reversing traditional retirement thinking could be the difference in having more gold in your golden years.

Here’s an article I came across about saving for retirement even when you can barely pay your bills now.

I barely have enough money to pay my bills. How can I afford to save for retirement?

It may be a lot easier than you’d expect.
The government and most employers kick in some money to help you reach your goals, so you can set aside a substantial amount of money without taking much of a hit in your paycheck.
In that case, you’ll get $1,200 from your employer, bringing your total contribution up to $3,600, just by contributing $2,400.
And that $2,400 doesn’t lower your paycheck dollar for dollar, either, since you’re investing the money before you pay taxes on it.
If you’re in the 25% bracket, investing $2,400 will only reduce your take-home pay by $1,800 for the year.
So it actually costs you just $150 per month to end up with a $3,600 contribution every year.
If you start doing that at age 30, you’ll have about $670,000 by the time you’re 65, if your investments return 8% per year.
And if you can afford to invest even more, open up a Roth IRA, which will give you tax-free money in retirement.Even a little bit can add up, especially when you’re young.
Investing just $100 per month into a Roth IRA can add up to $1,200 by the end of the year.
And if you’re 30 now, keep up that savings pace for the next 35 years and your investments earn 8% annually, then you’ll have more than $220,000 in tax-free money by the time you’re 65 — just by investing $100 per month.
That’s a big chunk of your savings goal, but it may not be not enough to cover all of your retirement needs — especially if you start saving after age 30.
Keep adding more money to your retirement savings whenever you get a raise or bonus at work or a big gift.
That way, you’ll invest the money before you get used to having it.
You can also look for ways to trim your spending to free up cash for investing.
See Stop Living Paycheck to Paycheck for some helpful tips.
That’s in addition to any retirement savings you set aside before you turned 40, which has even more time to grow by the time you retire.
For advice on saving for retirement, and calculating your savings goals, see How Much is Enough?
Then run your numbers through our retirement savings calculator to help set your specific target.